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Bankruptcy Terms to Know: Redeem

The second option when writing a statement of intention is to redeem your debt. You can pay a creditor what your personal property is worth now instead of what you owe on it. For example, if your car is worth $5,000 and you owe $7,000, you would only pay the creditor $5,000 in exchange for keeping the car and can save you several thousand dollars if you owe a lot more than the car is worth.

This is a very appealing option to many—but the payment must be a lump sum. If this is an option that works for you, it could save you a lot of headaches and free up enough of your income to get you back on track. There are companies out there that do redemption loans so you actually don’t have to come out of pocket with the lump sum payment. Our next term to know will be the third and final option, surrendering your property.

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